Home Equity Loans

If you own your home, a home equity loan allows you to borrow money against your property.

Already own property? A home equity loan can help you expand

You may wish to upgrade your current home, or even put down a deposit on that investment property you have been thinking about. No matter what the purpose of the funds, if your home is worth more than the outstanding balance owed, a home equity loan is something you can consider. 

What is a home equity loan?

A home equity loan involves borrowing money from the bank while using the equity in your existing property as security. If your home is worth more than the outstanding balance owed, you can consider taking out a home equity loan.

Homeowners can use home equity loans for a range of purposes and to meet a variety of financial needs or goals. That often includes renovating your current home, purchasing a vehicle, or even starting a business. However, the most common purpose of a home equity loan is usually for purchasing investment properties.

Key Benefits

Expert home equity advice

Our home loan experts are here to help you navigate the confusing home loan market. 

Buying a property can be stressful, thanks to the many different mortgage options available today in Australia. When it comes to home equity loans, we’ll crunch the numbers and read the fine print, so that you get the deal that best suits you. And we’re with you every step of the way.

Click here for expert home equity loan advice.

What is the downside of a home equity loan?

As with all loans, home equity loans come with some level of risk.

Some property owners who take out a home equity loan may abuse the funds and not use them for their intended purpose. This ends up being a waste of equity and costs a lot more in the long run. Another risk associated with home equity loans is exorbitant interest rates. Choosing the wrong lender can cost you a lot of money and that should be avoided at all costs.

We’re here to help you determine whether a home equity loan is the best option for you. And if it is, we’ll find the best lender, with the best terms.

There are two options available for consumers to choose from

Lump Sum

As indicated by their name, lump-sum home equity loans provide you with a considerable sum of money upfront and allow you to repay the loan within a fixed period through monthly repayments. Interest rates can be fixed or variable, which is where we will assist in making the correct decision by assessing the financial environment.

Line of Credit

Compared to a lump sum loan where you apply for a set figure, a home equity line of credit (HELOC) approves you with a maximum amount of available credit, and you simply borrow as you need. You can borrow gradually from the line of credit as required, and reimburse through minor payments. To abolish the loan, you must make fully amortising payments.

Frequently Asked Questions

Equity is the amount of value of the home that the owner actually possesses. It’s also the difference between the value of the home and the amount that you owe on your loan. 

Here’s an example.

If you paid a 20% deposit when you purchased the property, the amount owing to the bank is 80% of the value of the property. Say that in the future, you owe $200,000 on your home loan. 80% of the value of your home is $600,000. Therefore, you have $400,000 in equity available. This equity can be used as security on a home equity loan.

A home equity loan will usually let you borrow up to 80-85% of your property’s value, minus the outstanding balance on your home loan. It often depends on the lender themselves. Some may even allow you to borrow up to 100%. It’s worth seeking expert advice before entering into a home equity loan agreement because as with any loan, there is risk.

A home equity loan involves taking out a loan against the amount that you have already paid off. On the other hand, refinancing your mortgage means taking your agreement to a different lender, for better terms or interest rates. It does not involve borrowing against your equity.

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Mark Blackwood

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Other mortgage options

No Deposit Home Loan

Have you been struggling to save your mortgage deposit and feel like you are getting nowhere?

If you want to get into the property market sooner rather than later, we may be able to help you with a low or no deposit home loan. Did you know that your new home or investment property may be well within your reach, even without a deposit? Chat with our home loan experts and find out what Australian mortgage option suits you.

Refinance Home Loan

Are you considering refinancing your home loan?

If you want to get into the property market sooner rather than later, we may be able to help you with a low or no deposit home loan. Did you know that your new home or investment property may be well within your reach, even without a deposit? Chat with our home loan experts and find out what Australian mortgage option suits you.